As treaties and trade agreements are implemented this year, more U.S. companies are looking at the Association of Southeast Asian Nations for fresh business opportunities. Fortunately, a whole host of logistics and transportation service providers are laying the groundwork to overcome inherent infrastructure challenges.

Today, U.S. trucking companies face more regulations than any time in history—and they claim this “regulatory tsunami” is putting the clamp on U.S. productivity. During this session shippers will gain a better understanding of the current state of trucking regulations (HOS & CSA) and the impact they're having on capacity and rates.

Impact of New Century Transportation’s bankruptcy likely to be easily absorbed by market

By Jeff Berman, Group News Editor
June 12, 2014

Earlier this week, Westampton, New Jersey-based New Century Transportation, a provider of trucking and warehousing services shuttered operations, filed for Chapter 7 bankruptcy liquidation.

New Century CEO Terrence Gilbert wrote in a June 9 letter to company employees that “due to an unforeseeable and dramatic change in business circumstances beyond its control, New Century expects that it will permanently shut down all of its facilities…and will terminate all employees.

Gilbert explained that the need to shut down operations arose when the company’s lender recently and unexpectedly declined to continue funding regular business operations, which led New Century to take steps to seek financing and other alternatives, including a sale of all or part of the Company in order to continue operations. And he added that those efforts had not been successful to date and that New Century believes it could not have provided earlier advance notice of the shutdown as it would have precluded the company’s ability to secure alternative financing or a sale.

This development impacts about 1,500 nonunion drivers and other staff at depots in the U.S., according to a Philadelphia Inquirer report. The report added that New Century, which was owned by Jeffries Capital Partners, was a “de facto successor” to Jevic Transportation, a New Jersey-based nonunion trucking company.

Established in 2000, New Century provided various transportation services, including: load-to-deliver; LTL; truckload; temperature-controlled; dedicated services; guaranteed service; and warehousing.

“They were a quality carrier and did a good job,” said a Northeast-based LTL executive whom declined to be identified. “This really took everyone by surprise. They were particularly strong on the temperature-controlled side. If this had happened over the winter, the impact could have been severe.”

According to data from SJ Consulting, New Century had about $145 million in revenue, which its president Satish Jindel said should be absorbed fairly easily. The company deployed a hybrid TL-LTL model (also known as load-to-deliver and is based on pre-planning loads that require a similar and picking up and delivering shipments along the way) with average shipment weight more than 3,000 pounds, which Jindel said was more than double the LTL industry average, adding that New Century was moving about 10,000 shipments per week.

“The way their pricing model was, they tried to set rates between TL and LTL, so now they will have to give it to someone who either wants heavier shipments or ones dealing with more traditional LTL pricing and processing freight through a terminal so New Century’s shipper customers are the ones who may have to spend a little bit more to get the service they need.”

In terms of how New Century’s departure impacts available capacity, Jindel said the impact will not be major.

The reason for this, he said, was that its revenue was declining (it had $150 million in 2012 revenue, according to SJ Consulting), coupled with the fact that other LTL carriers may hire New Century drivers and also pick up some of their business.

“The real message with this is that company’s with models similar to New Century’s need to be paying attention to how the market is changing, both in terms of customers needs and in terms of driver issues,” he said. “If I am driving for a company like New Century, I may not have some of the benefits of working for an LTL, where I get to come home every night, and I am on road for a night or two like a truckload driver, and I also have to make multiple stops. The current business environment makes it harder to support a business of this kind.”

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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